Supply Chain, Logistics, and More…

How Product as a Service Enables the Circular Economy

June 7, 2017June 7, 2017

The New Economy is a Circular Economy

For those not familiar with the term Circular Economy, let’s start with a definition. According to Wikipedia:

A circular economy is a regenerative system in which resource input and waste, emission, and energy leakage are minimized by slowing, closing, and narrowing material and energy loops. This can be achieved through long-lasting design, maintenance, repair, reuse, re manufacturing, refurbishing, and recycling. This is contrast to a linear economy which is a ‘take, make, dispose’ model of production.

Product as a Service

Most of the products consumers use are bought in stores, online or offline. Ownership of the products is with the users, and that is what it makes it difficult to create truly circular products. The owner needs to be willing to recycle, repair, or reuse a product when it brakes down, or is no longer needed. The easiest way to solve this is to make sure that ownership is with one party, preferably the manufacturer. That way the end user no longer pays for ownership, but for access to the product. Product as a Service.

Lighting as a Service

A great example of a company using this approach is Dutch lighting manufacturer Philips. In 2015 they introduced Light as a Service, and launched their project at Schiphol Airport. The concept was developed by architect and circular visionary Thomas Rau of Turntoo. Philips stays the owner of the lamps and the fixtures, and also pays for the electricity. This means that they now have every reason to produce lights that are as energy efficient as possible, and with an almost endless life span. When one breaks down, Philips is paying for its replacement.

Headphones as a Service

Last year Dutch Startup Gerrard Street developed this same concept for sound. In the summer of 2016 I spoke with Dorus Galama about their new concept Headphones as a Service. “150 million kilograms worth of headphones are thrown away each year, and most of the time it is because the cable broke. The most complex and expensive part, the speaker, is still working fine”. Dorus and his fellow designer and co-founder Tom Leenders wanted to do something about this. The idea for modular headphones was born.

Before meeting Dorus I ordered one of their headphones. I was surprised to see that it arrived by regular mail in a package that fit through my mailbox. Great move from a logistics point of view, as the cost for shipping through regular mail is much lower than with using a parcel carrier. The headphones were easy to assemble and within a few minutes they were ready to go. Check the video further below to see how easy this is.

The concept is very simple and straightforward. For a monthly subscription fee you get a pair of headphones. Because they are modular any part that breaks down is easy to replace. You simply notify Gerrard St of the broken part. They send you a replacement part and you use that same box to ship back the broken part. Gerrard St then either repairs or recycles the part. This eliminates a lot of waste, and greatly improves the product lifetime for the headphones.

No Strings Attached

The production run for the first model, the Bird, was 1000 units, which have now almost all been rented out. The team is now working on the launch of a second model, the Boss, which will be cordless and Bluetooth enabled. They have also added a microphone, so you can use it for calls or video conferences. The crowdfunding campaign has just closed, and the project got funded 136%. With the funding the team will be able to create all the molds they need for the first production run of their second model. If you are based in the Netherlands: at the time I am writing this it’s still open for pre-ordering.

More Sound as a Service

I will keep following this startup with interest. I’m sure expansion to other countries is in their future, and I’m also very curious to see what other electronics they find suitable for the Product as a Service model. I can’t go a day without music, so bring on more Sound as a Service!